''It's nearly at a critical point now for exporters. Domestic prices have surged to the point where exporters are losing more than $100 a tonne from the fourth quarter of last year to now,'' said association president Chookiat Ophaswongse.

Export sales in the fourth quarter were quoted at $370 to $380 per tonne for 100% white rice, compared with $450 per tonne now, with prices up due to higher domestic prices and the weaker US dollar. Hom Mali rice prices are now quoted at $750 per tonne, up from $680 in December. Domestic prices have risen by around $10 per tonne or around 50 baht per 100 kilogrammes.

According to the Commerce Ministry, 100% white rice is now quoted at 14,500 baht per tonne, up from 11,100 baht at the end of 2007. Hom Mali rice has risen to 23,000 baht per tonne from 16,000 to 17,000 baht at the end of last year.

''Some exporters are negotiating with their customers to cancel deliveries and pay compensation for the default,'' Mr Chookiat said, blaming price increases on speculation by local rice merchants and mills.

While output from the first crop had been relatively steady, less supply was coming into the system through the government rice-mortgage programme.

''Some farmers are just keeping their stocks in hopes of higher prices. They might sell only 50% of their harvest, but the revenues are the same thanks to higher prices,'' Mr Chookiat said.

He warned that rice exports could drop sharply in the second quarter if the prices continued to increase.

January rice exports totalled 800,000 tonnes, up 25% from the same period last year. Exports are expected to average around 700,000 tonnes per month for the first quarter. Thailand exported 9.5 million tonnes of rice last year, leading all world producers. Exports are targeted at 8.75 million tonnes this year. The overall market is expected to remain strong thanks to demand from Africa and Asia.

The Philippine government last week opened a bid for 550,000 tonnes of 25% white rice. Thai exporters won 154,000 tonnes at a CIF (cost, insurance and freight) price of $450 per tonne, while Vietnam, the No. 2 exporter, won 300,000 tonnes at $475 to $480 per tonne.

Mr Chookiat said the deal was quite ''unexpected and shocking'', as Vietnam had never proposed a higher price than Thailand for such a bid before.